At many car audio dealers close to 1 in 6 customers arrive with their own car audio equipment, often brought elsewhere, most likely on the Internet.
We polled over 25 car audio retailers, and found at the highest level, 40 percent of customers bring in their own product.
One shop said it could keep an extra installer busy 40 hours a week with brought-in product. Luke Fidler of Audio Expert, Clearwater, FL said, “I have installed more Pioneer NEX radios and ADS Maestro RR interfaces that were customer-supplied than I have sold. I’d say 30-40 percent of our installations involve at least SOME customer supplied parts.”
Vikas Moolchandani of Avenue Sound said 40 percent of customers bring in their own product. “The Internet is inevitable. I don’t see myself teaching that customer a lesson, and I’m not going to pull money out of my pocket and send it to my neighbor’s [shop], I have a commitment to keep my team busy and pay them every week.”
A surprising number of retailers do not charge a higher labor rate for brought-in product, but many said they are successful at convincing many of the customers who purchased Internet product to return it and buy from the shop, where they get a warranty. One dealer said he converts 90 percent of customers and another said 50 percent.
Some, such as Car Tunes, Santa Rosa, CA charge a bench test fee of $25 to $35 to test any brought-in products.
Nearly every retailer who accepts walk in products said they found a way to make it profitable. Moochandani said, “I had a customer today come in with a brand new AudioControl DM-608 DSP. We’ll install it next week with his own amplifier, but it needs a $300 interface to make it happen and he’ll spend $800 in labor. We always find a way to upsell.”
Some say it’s difficult to charge a higher labor rate for bring-your-own customers. “Raising labor rates, that leads to disgruntled customers. We solicit Yelp reviews. If you take care of your customers, you get positive reviews, if you dis someone, they are quick to write a review and that will cost you thousands of dollars. It’s a very sensitive issue. That’s why we’re 5 stars in Stockton with 55 positives and maybe one negative review,” said Chuck Allen of Warehouse Car Stereo in Stockton, CA.
The shop offers window tint, and says Yelp is even more important in that category. “When we ask our customers how they found us, 2 out of 3 says Yelp or online,” said Allen.
But some retailers turn away walkins or discourage them through high premium labor rates. Others will accept some brought-in product but insist that all installation accessories are purchased at the store. Some also won’t install remote start as they find more defects in customer-supplied items.
SoundFX, West Warwick, RI, doesn’t accept any brought in product due to liability issues. “Fortunately we are busy enough that it does not effect us. Last year was the first full year we stopped installing customer gear and we had our best year yet. The way I see it is that out of 10 calls we would probably book about 2. And out of the 2, the liability is too high,” VP Operations Mark D’Elia. The saying “Not our fault, but our responsibility” became all too common, he added, referring to the fact that if a product fails consumers will tend to blame the installing retailer.
Musicar Northwest, Portland, OR says it charges a 35 percent higher labor rate for brought-in product so most of the customer will simply go to another shop.
Al & Ed’s, CA says about 25 percent of its customers are of the bring your own type. Tint World Orlando says 10-15 percent of customers bring in their own product. For Sound Connection, Laredo, TX, the figure is 20- 30 percent; GNC Customs about 25-30 percent; ABT, near Chicago, 10 percent, MCOR Automotive, Lutz, FL 2 percent; 806 Autoworks, Amarillo, TX, 5-10 percent and Unexpected Creations, Edison, NJ, about 10 percent.
Car Toys, Seattle with over 50 stores says it doesn’t have a hard percentage for brought-ins but VP Merchandising & Marketing Jim Warren said, “We do service a lot of customer owned goods and welcome them into our stores… These customers get charged the same labor rates, and the services are of the same quality as any other work we perform for customers purchasing their product from us directly.”
A key benefit to accepting bring your own customers is repeat sales. Or as Fidler explained, a customer “walked in the door with his NEX, Maestro RR, kit, harness etc etc and had no idea he could have bought it locally. But we took care of him and he sent his sister to us for the unit. And I feel like we will have an opportunity at his future purchases as well.”
But Joe Cassity, of Tunes N Tint, FL said the numbers don’t add up. “…the average shop will have between 30-40% of gross sales consisting of labor. When you are installing Customer supplied equipment your reducing your $$$ per hour by 60-70% of your potential in most cases from a volume POV and at minimum often times reducing your profit dollars up to 30% of potential versus billable (hourly).”
We are at a military base in NC. We have two stores. The store closest to the base has about 60 to 70% of customers that bring in their own gear to get installed. This has been a trend that has been unfortunately growing. To top it off, 99% of the radios that get brought in is Pioneer. We no longer sell Pioneer because of this reason. It makes stores look bad. We can still make money on Kenwood Excelon product. I would advise every retailer to stop selling Pioneer for this reason.
pioneer does not seem to care if it is a profitable line. others feel the same way.
We recommend that its always good to add new customer to your client roll. Turning away new customers is an expensive mistake…
That said, offering a “discount” on labor rate, to all customers, both new and ‘repeat’ is simply way smarter, strategically speaking (long-term) way to go. Who doesnt like a ‘discount?’
If your IN the business of integrating gear into
‘Computers on wheels,’ and are the ‘best shop’ in town, then its not an issue to raise labor rate to
$95 – $125 per hour. The message is simple; Go somewhere else and ‘take your chances’ w/ your ride…
“Tactics without Strategy is the ‘noise’ before defeat”
–
Sun Tzu
Customers at our store get charged a 50% premium on labor. We will not use any installation supplies bought from outside the store specially amp kits. We will still warranty our installation for life but will charge the customer for removal of equipment if it ever fails.
with our high operating expenses we need the margin on the product. we offer to split the profit we would have made on the product with the customer. we explain it to them. really want to treat labor on cars like the dealers do, $150.00 per hour. we tell them how special we are with career installation technicians that are well paid craftsmen. at that point we would not care where the product came from. thankfully there is a best buy across the street. i usually drive the customer there.
everyone is a millionaire-until they walk into my door. rag pickers. ha!
No steak to the steak house over here. House rules!